“I buy on the assumption that they could close the market the next day and not reopen it for five years.”
— Warren Buffett
The Warren Buffett investment philosophy calls for a long-term investment horizon, where a five year holding period, or even longer, would fit right into the strategy. How would such a strategy have worked out for an investment into Las Vegas Sands Corp (NYSE: LVS)? Today, we examine the outcome of a five year investment into the stock back in 2016.
| Start date: | 09/06/2016 |
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| End date: | 09/02/2021 | ||||
| Start price/share: | $54.73 | ||||
| End price/share: | $44.01 | ||||
| Starting shares: | 182.72 | ||||
| Ending shares: | 220.25 | ||||
| Dividends reinvested/share: | $11.23 | ||||
| Total return: | -3.07% | ||||
| Average annual return: | -0.62% | ||||
| Starting investment: | $10,000.00 | ||||
| Ending investment: | $9,694.32 | ||||
As we can see, the five year investment result worked out poorly, with an annualized rate of return of -0.62%. This would have turned a $10K investment made 5 years ago into $9,694.32 today (as of 09/02/2021). On a total return basis, that’s a result of -3.07% (something to think about: how might LVS shares perform over the next 5 years?). [These numbers were computed with the Dividend Channel DRIP Returns Calculator.]
Notice that Las Vegas Sands Corp paid investors a total of $11.23/share in dividends over the 5 holding period, marking a second component of the total return beyond share price change alone. Much like watering a tree, reinvesting dividends can help an investment to grow over time — for the above calculations we assume dividend reinvestment (and for this exercise the closing price on ex-date is used for the reinvestment of a given dividend).
Based upon the most recent annualized dividend rate of 3.08/share, we calculate that LVS has a current yield of approximately 7.00%. Another interesting datapoint we can examine is ‘yield on cost’ — in other words, we can express the current annualized dividend of 3.08 against the original $54.73/share purchase price. This works out to a yield on cost of 12.79%.
Here’s one more great investment quote before you go:
“The person who starts simply with the idea of getting rich won’t succeed; you must have a larger ambition.” — John Rockefeller
